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November 3, 2016, Trial News

Arkansas court blocks tort reform ballot initiative

Ryan Watson

The Supreme Court of Arkansas has blocked Issue 4—a cap on noneconomic damages and contingent fees in “medical-injury” lawsuits—from the general election ballot, holding that its ballot title and amendment text would not sufficiently inform voters of its effect.

The Supreme Court of Arkansas has blocked Issue 4—a cap on noneconomic damages and contingent fees in “medical-injury” lawsuits—from the general election ballot, holding that its ballot title and amendment text would not sufficiently inform voters of its effect. Opponents raised other challenges to Issue 4, but the court declined to consider them. (Wilson v. Martin, 2016 WL 5939735 (Ark. Oct. 13, 2016)).

Issue 4, or the “Amendment to Limit Attorney Contingency Fees and Non-Economic Damages in Medical Lawsuits,” would have amended the Arkansas Constitution, requiring the state legislature to enact a cap of at least $250,000 on noneconomic damages in medical-injury cases. The amendment defined the terms “health-care professional,” “health-care business,” and “medical injury” but gave the state legislature the authority to further define those terms. Finally, it prohibited “excessive contingency fees”—defined as more than one-third of the net recovery and without deduction for office or overhead expenses.

Attorney David Williams of Little Rock, Ark., who has long fought against tort reform, described Issue 4 as a Trojan horse. The real goal, he said, was to take power away from the Arkansas Supreme Court—which has protected the Seventh Amendment, striking down punitive damages caps—and vest it in the legislature. Williams said the amendment would “transfer to the legislature power that had historically been reserved by the Arkansas Constitution to the judiciary—to determine rules of civil procedure and evidence, to define injuries, and to allow juries to have the exclusive right to set damages.”

The anti-Issue 4 group “Fairness for Arkansans” challenged the initiative, arguing that its ballot title was misleading and insufficient: It did not define noneconomic damages, it did not explain that the Arkansas Supreme Court’s rulemaking power would be limited, and it did not inform voters about the damages cap. The pro-Seventh Amendment Committee to Protect Arkansas Families filed a second challenge attacking the signature collection process to certify the measure for ballot, arguing that pro-initiative canvassers failed to comply with certification laws and filing requirements and that there were not enough valid signatures.

In striking down Issue 4, the Arkansas high court addressed only one argument—that the ballot title was insufficient because it did not define noneconomic damages. “The term ‘non-economic damages’ is a ‘technical term’ that is not readily understood by voters,” the court explained. “Without a definition of this term, the voter would be in the position of guessing as to the effect his or her vote would have unless he or she is an expert in the legal field.” Because a voter would be “unable to reach an intelligent and informed decision” based on the information in the ballot title, it was insufficient. Issue 4 will still appear on the November ballot, but the court enjoined the Secretary of State from counting or certifying votes cast for the measure.

Attorney JD Hays, of Springdale, Ark., said it would have been devastating for trial lawyers if the amendment had passed. “It would have affected every aspect of our practice,” he said. “It would have essentially ended medical malpractice and nursing home cases in Arkansas. The worst part would have been telling person after person and family after family with valid cases that we either couldn’t take their case or that their case was now worth pennies on the dollar.”

Much of Issue 4’s financial backing has come from nursing homes—in particular, from Michael Morton, a man Williams described as “the largest owner of nursing homes in Arkansas.” After an elderly woman died in one of Morton’s nursing homes, a jury returned a $5 million wrongful death verdict. The trial judge, Michael Maggio, reduced the verdict to $1 million, but “Morton was implicated in the delivery of money disguised as campaign contributions to Judge Maggio,” Williams said, in order to get the verdict against Morton’s nursing home reduced. Judge Maggio pled guilty and is appealing his conviction to the Eighth Circuit Court of Appeals, and Morton has funneled money into Issue 4.

Both Williams and Hays believe the issue will return. “Our legislature can refer three constitutional amendments out each session,” said Williams. “There’s a session in January, and the tort reformers and legislators have already started talking about making it a priority to get a tort reform amendment out. They promise that’s coming, so we’re trying to get ready for that.” Hays agreed. “We’re ready for the fight. The stakes are so high for the regular people we protect. We’ll fight with everything we have and never quit.”